Who would you blame if you took out a half-million-dollar loan and couldn't make the payments?
Last November the Culture and Media Institute and its sister Media Research Center division, the Business and Media Institute, found that NBC and ABC consistently ignored the issue of personal responsibility for consumer debt, while CBS was the most likely network to promote responsibility.
Nearly four months later, on March 6, home foreclosures have reached a record high and many homes are not worth what owners owe. Though the mortgage crisis has grown worse, nothing has changed in the network coverage.
ABC reported the story in a straightforward manner, neither including nor discrediting personal responsibility.
NBC played the victim card. The March 6 Nightly News broadcast introduced viewers to Eddie Zapata, a California man who, along with his wife, is, according to NBC's George Lewis, “now turning [their] house over to the mortgage company, unable to keep up with the monthly payments and owing far more than the place is worth.” Sad, right?
However, the March 8 NBC Nightly News broadcast revealed that Zapata took out a no-money-down adjustable rate mortgage for their house four years ago, made some updates to the house and couldn't afford the payments when they increased by $700. Zapata just walked away.
NBC failed to challenge Zapata about his responsibility to pay back a loan he borrowed or if he looked at other repayment options. The network also failed to ask Zapata whether he understood the terms of the loan he took out four years ago.
During NBC's Saturday Today on March 8, CNBC correspondent Dana Olick attempted to rationalize such behavior:
DANA OLICK: Frankly, it's a lot of homeowners who are looking at their mortgages now, saying that the price of their home has fallen below the value of their mortgage—that is called negative equity—and their saying, 'Why should I keep paying a mortgage, even if I can, if I'm really paying for nothing? I'm paying for negative equity.' And some are saying, 'You know what? This was an investment – sure it's the home I live in – but I'm just going to walk away because I don't want to pay for it anymore.'
AMY ROBACH, co-host: Yeah. And we know the government has offered these programs, these incentives to help boost the economy. Has there not been enough time to see any progress, or are they going to work? Do we even know at this point?
OLICK: Well, most of them really went into effect in December, beginning of January. That's the HOPE NOW initiative from the Treasury Department, where banks and lenders are getting together and trying to modify some these loans. There are a couple problems with them. Number one, they can't modify all the loans, especially if people are not current on their initial payments, not just the reset payments on these adjustables. Also they're actually having trouble getting people to contact them, folks who are in trouble, to say, “Look, I need help.' And then there's the whole other issue of that these mortgages were sold off to other investors so your bank or lender may not actually own your mortgage and that makes it that much harder to modify.
Olick failed to stress that even though there is government assistance available to people unable to meet their mortgage payments, they still have to take some responsibility for their situation and reach out for the available help.
It was a different story on CBS. The March 6 Evening News coverage noted proposed legislation for government assistance while failing to examine the responsibility borrowers had to the lenders, but The Saturday Early Show on March 8 advocated patience and personal responsibility. Co-host Chris Wragge discussed the mortgage crisis with Beverly Goodman, senior editor of SmartMoney:
BEVERLY GOODMAN, senior editor, SmartMoney: The home prices fell a little bit and boom, you owe more than the house is worth.
CHRIS WRAGGE, co-host: What are some of the options if you're involved in a situation like that? Which a lot of Americans are right now.
GOODMAN: A lot of Americans are. If at all possible, if you can make your mortgage payments and everything else is still doing ok in your financial life, hang tight. The market will rebound. It may take a couple of years, it may take five years.
GOODMAN: But if you—if you can afford the payments, just sit on the house and try to wait for it to recover.
As for just walking away from a mortgage, Goodman said
I mean, that's essentially a foreclosure by default and you're relinquishing the control of your financial life. That's really not the best idea. The only people that can ever even consider doing that are basically people that have no equity in their homes, but you're still putting yourself at great risk for never being able to get a mortgage again.
Finally, Goodman reminded viewers that “the truth is this is the way markets work. They don't always go up and that's a lot of – it's a hard lesson for a lot of people in the housing market to learn.”
CMI and BMI recommended that the media include personal responsibility as a vital component of debt stories in order to provide more complete, objective coverage. The media have a long way to go.